Comparing Growth in Income Inequality: Late 1990s Had More

July 15th, 2007 9:08 AM

The meme: Income inequality during the Bush Administration has widened, as the rich have gotten ever richer.

A sub-meme: Income inequality during the previous administration lessened, or at least didn’t get any worse.

But facts are stubborn things, as information obtained from the Census Bureau and viewable at the full post shows (scroll down at the link to get to inflation-adjusted data):

From Table H-3. Mean Household Income Received by Each
Fifth and Top 5 Percent — All Races: 1967 to 2005

CensusInc19962000and20012005

The highest quintile (fifth) and 5% of households had double-digit real income increases from 1996-2000, while those same groups experienced declines from 2001-2005.

It is likely that the 2001 and 2003 Bush tax cuts caused the higher-income groups to have a slight increases in real after-tax income. But don’t forget that the tax cuts benefited every income group, thanks to the expansion of the Earned Income Credit and the reduction of the lowest tax bracket from 15% to 10%.

Other than the New York Times, which has been obsessed with income inequality since at least the early 1980s, Old Media rarely focused on the growth in income disparities that occurred the 1990s. In the runup to the 2000 election and ever since, that has all changed. Even Wall Street Journal writers who should know better like Arthur Brooks (requires subscription) take it as an article of faith. Democratic presidential candidates, especially John Edwards (noted near the end), have made income inequality a central theme of their campaigns, and reporters like NPR’s Mara Liasson simply assume it’s true. Apparently the best defense the Bush Administration can mount is that it has been happening for decades (second paragraph at link).

Why?

Cross-posted at BizzyBlog.com.